What happened 

Shares of luxury jewelry retailer Tiffany (NYSE:TIF) trailed the market last month, shedding 18% compared to a 1.8% boost in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump put the stock at a new yearly low despite having been up by more than 30% at one point in 2018.

So what

Investors weren't happy with the company's fiscal third-quarter report, which was released late in the month. That report showed surprisingly weak sales growth in many key markets, including Japan and the U.S. Executives blamed the slowdown on scaled-back spending on the part of Chinese tourists, who constitute an important demographic for the retailer. Tiffany also revealed lower profitability as management spent heavily in areas like marketing, labor, and the online selling channel.

A woman wearing diamond jewelry.

Image source: Getty Images.

Now what

These spending initiatives are expected to lay the groundwork for faster, more sustainable growth ahead. But at least for 2018, they'll result in lower profitability. Notably, Tiffany left its short-term sales growth outlook unchanged despite the fact that the prior quarter missed management's targets. Thus, the jewelry giant is on track to increase annual sales for the first time in years, which would mark an important step in its wider global recovery plans.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.